The Indian $10 Laptop

Some years ago it was some genius who was making petroleum by twirling some sticks in a bucket of water. The Indian press reported it breathlessly and which is worse, some dimwitted “professors” from some “educational” institutions even considered it seriously. The details of that are hazy in my mind but I was reminded of it when I read that the government is going to produce a laptop for Rs 500 (or US$ 10).

A collaborative team between the Indian governments ministry of science and ministry of technology will unveil a super-low-cost computer on February 3rd, as part of the country’s $10 laptop project. Specifications of the notebook – which is intended for education use – are unconfirmed, but unofficial sources suggest it will have 2GB of memory, both ethernet and WiFi connectivity, the ability to expand the storage and low power requirements of just 2W, all in a small, portable package. [Slashgear]

Like Milton Friedman saw money supply factors behind every economic disaster (which provoked Robert Solow to remark “Everything reminds Milton Friedman of the money supply. Everything reminds me of sex, but I try to keep it out of my papers”), I see the failure of the Indian education system behind every episode of public stupidity.

I am quite willing to recognize that government officials are not the sharpest knives in the drawer — one secretary for higher education said, “At this stage, the price is working out to be $20 but with mass production it is bound to come down” — but how does the press go about reporting their statements as if they make even the least bit of sense? How on earth is one be able to compose syntactically correct sentences and publish them in blogs without having the ability to reason worth a damn, like this item in The Better India illustrates?

The writer states that poor people cannot afford laptops for education now but this “is poised to change in the near future with the advent of a new Rs. 500 laptop (currently in prototype phase).” Why? Is it plain gullibility? He read somewhere that the government has claimed it to be so and uncritically accepts it as something that is even remotely possible. Besides that, what he fails to do is basic arithmetic.

I think that the Indian education system fails dramatically when it comes to teaching basic arithmetic. Of course they do teach 2 plus 2 is 4 and that sort of thing. But it does not teach how to reason after doing the sums. It is not just how to add that matters but what and why of addition that matter more.

So what’s wrong with a $10 laptop? What’s wrong is that it flies in the face of all reasonable expectations about the world. It is disconnected with reality. The reality is that Nicholas Negroponte’s OLPC project tried desperately to build a $100 laptop and despite having access to considerable talent and expertise, the best it could do was a machine that costs around $200. What this tells us is that hardware costs, though they have fallen dramatically over time, are still high enough that it is virtually impossible to produce a laptop for around $100. If it were possible, they would have done it.

One has to either ignore — or be totally ignorant of — physical, commercial, and technological limitations to make an outlandish claim that the Rs 500 laptop will consume 2 watts of power. Even a small phone consumes more than that, and any laptop is a lot more complex than a cell phone.

The most compelling reason for totally rejecting this claim of a Rs 500 laptops is this: if the government, together with “students of Vellore Institute of Technology, scientists in Indian Institute of Science, Bangalore, IIT-Madras” could pull-off a near-impossible technological miracle, does it not imply that the entire global computer industry is either totally incompetent or else it is a huge big scam which actually produces stuff at very little cost and then sells them at exorbitant prices.

As far as I know, the global IT industry is viciously competitive and therefore cannot price their goods — especially consumer hardware — at prices too far above costs. So if the price of some display is $200, one can be reasonably sure that that is pretty much very close to cost. Furthermore one can be confident that each manufacturer is trying its best to reduce the cost as much as possible — because that is how they make their profits. That’s called competition in the market.

So if one were to believe that some entity is capable of producing some sort of laptop at a cost of Rs 500, then one has to believe that that entity can overturn the entire global IT industry by producing it cheaply and undercutting every other vendor in the world. If the laptop costs Rs 500, presumably each major component of it must cost less than Rs 50, assuming that it has at least 10 major components. Since these components each actually cost Rs 500 at least (and most cost in the thousands), if the government can produce them at a tenth of those costs, clearly the government of India should be in the hardware manufacturing business. Clearly the Intels, HPs, Dells, Samsungs, IBM, etc should be worried.

But wait! It is not that the cost is Rs 500 but the price will be Rs 500. Perhaps that’s what the government means. The government will sell it for Rs 500. And you and I will foot the bill. Votes. Votes bought at our expense. Good thinking, dear UPA.

Sure enough we are not there yet for the $10 PC, but we are getting there faster than we thought earlier.

During the past year or so, ever since Asus introduced the Eee PC, the netbook category of PCs is gaining traction and can come closer to $10 pricing faster than any other product line. A few trends are making this low-cost a reality: panel prices are dropping, Intel’s Atom processor will likely be replaced by much cheaper ARM processor that has sufficient processing power for this product line (or even VIA or AMD), Linux is already on some of these low-end netbooks (Ubuntu) and the manufacturers will sell this product bundled with some kind of a internet access/3G service fee. I know one of my customers has a netbook product priced under 600RMB (around $90) which is selling well today.

Who would have thought CD/DVD players will sell at $19 or so when the first pricepoints were at $400+ ?

Whether these low-cost PCs are essential or even mildly helpful in improving the education status in India, that is a different question: I think they will have an impact provided a whole host of specific software applications are built to achieve it.

This whole low-cost laptop thing is an opportunity for the educational software segment to tap into it. I think in the end, the real revolution here may lie in how the Indian software industry will turn innovative to take advantage of this segment. I think there is a business model out there that can deliver a $10 PC to the user, but the same business model will also require the user to pay for the software that is required for it. I am sure your readers have heard of Leapfrog toys (www.leapfrog.com). A low cost $10 netbook/laptop with Leapfrog like educational software/system for additional cost is not such an unthinkable one, and quite a welcome one in my opinion. Interestingly, the customer I referred to earlier – a China processor chip company – who is now stepping into the netbook segment generates their largest revenue from the educational toys segment.